Universal Life Fees

Q: Read your articles on universal life insurance with interest, especially since I am right in the midst of making a decision about this topic.

My interest was piqued when I attended a briefing given by a tax advisory group which pitched tax free savings now and tax free money... to your heirs. This was followed by a consultation at their offices where they took me to the something they called cash value life insurance or properly structured maximum tax advantaged universal life policies. I truly was falling for this until the issue of coming up with the money for the premiums of such a policy which would required that I take the money out of my differed vehicles (ie, iras and government thrift accounts), and also my home equity thru a reverse mortgage.

The cost of the reverse mortgage stopped this whole process for me because I could see me paying 15k of closing cost and fees to get 119K loan, then having to pay another 20k for closing cost and fees when I decided to sell the house later.

However, reading your articles raise more questions. Everything being pitched by tax advisory group comes from the recent book written by Douglas Andrews: THE LAST CHANCE MILLIONAIRE. Your thoughts on this would be greatly appreciated.

A: Very familiar with the book and the concepts promoted. And the situation you describe is not unique. Fortunately, you didn't fall for it.

Imagine if you had! Think of all the money you would have lost in fees. And to think that if you ever changed your mind on the insurance you would have lost even more.

This 'tax advisory group' was probably nothing more than a group of insurance agents trying to sound like they were accountants instead of salespeople. Studies have been done that show that people trust their accountant more than they do any other professional.

Your posted comments on this and other questions are welcome.
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